Monday, March 7, 2016

Kick in the Balls is Ma$$Mutual

One of the state’s largest companies, Springfield-based MassMutual Financial Group, said it will lay off 360 workers, primarily in Massachusetts.

The layoffs account for 5 percent of the insurance and financial services company’s 7,200-person workforce, spread between Springfield and Enfield, Conn. The staff reductions will happen across all divisions, the company said.

“MassMutual routinely and carefully examines all of its operations to ensure we are focused on activities that effectively and efficiently deliver the greatest value to our policy owners and customers,” said Jim Lacey, a spokesman for the company. “At times, this means making decisions that impact our staffing levels.”

The company reported that its profits were down significantly through the first nine months of 2015. MassMutual made almost $54 million in profits through the end of September 2015, a nearly 90 percent plunge from the $413 million that the company posted for the same time the previous year. Profits in 2014 were significantly higher due to the sale of the Fan Pier development in Boston’s Seaport District, in which MassMutual was an investor, Lacey said.

Still, MassMutual announced last year that it would make a record $1.7 billion dividend payout to eligible policyholders in 2016, a $100 million increase over the 2015 dividend. The company expects to report “strong” earnings for all of 2015 in the next week, Lacey said.

Like most financial companies, MassMutual has had to contend with low interest rates and volatile stock markets, which can hurt investment income and profits. New regulations that emerged from the 2008 financial crisis also have added costs.Yeah, right.

MassMutual has adjusted its workforce several times over the past few years. The company laid off about 500 workers in 2009 after posting investment losses during the recession. In 2011, in another restructuring effort, the company cut about 75 information technology workers.

The company, however, later added workers in some divisions and in 2013 bought the retirement planning business of The Hartford, which boosted its workforce by about 700 employees.

The layoffs could further worsen the unemployment rate in the Springfield metropolitan area, which has recovered more slowly than the state as a whole. The state’s unemployment rate had dropped to 4.7 percent in December 2015, while the unemployment in the Springfield metro area was 5.5 percent.

Liberty Mutual’s profits plummeted more than 70 percent in 2015 as the global home and auto insurer took hits from its troubled Venezuelan operations, bigger catastrophe losses, and lower investment income, the Boston company reported.What are they doing investing in Venezuela?

Liberty, the third-largest property and casualty insurer in the United States, posted profits of $514 million, down from $1.8 billion in 2014, company officials said in a conference call Thursday.They did way better than Ma$$Mutual.

Liberty Mutual reported the steep decline in profits just two days after the insurer disclosed that chief executive David Long received a 13 percent raise in 2015 that boosted his compensation to $15.7 million, up from $13.9 million in 2014. Liberty Mutual officials said Long’s 2015 compensation was based on 2014 results, when the company posted a 16 percent increase in operating profit.

Still, Long’s compensation has risen quickly since he was first named chief executive in June 2011. Since his first full year as chief executive, his pay package has climbed 76 percent from $8.9 million in 2012. Long’s incentives that year were based only on his half-year as chief executive in 2011, company officials said.

Company officials would not predict whether Long’s compensation would decrease this year as a result of the sharp decline in 2015.

“Compensation is set and approved by the Compensation Committee,” said John Cusolito, a spokesman for Liberty Mutual, “and is based on company performance and benchmarked against a peer group of companies by an independent nationally recognized compensation consultant.”

Liberty Mutual took a $909 million loss from its operations in Venezuela, which the company announced late last year it would discontinue. The insurer is pulling out of Venezuela after about 20 years and plans to sell its subsidiary because of the hyperinflation that has roiled that country and devalued its currency.

The International Monetary Fund expects inflation in Venezuela to hit 720 percent this year. Venezuela is a large oil producer and its economy has been rocked by the plunge in crude prices.

“It was a top quality, higher performing entity, which, due to the economic environment, could no longer be fully controlled and operated,” Long said about the Venezuelan subsidiary.

In addition to the premiums that they collect, insurers also make money by investing those premiums. Liberty Mutual last year lost $163 million on its investments in the energy exploration and production sector. The company’s total investment income declined in 2015 to $2.7 billion from $3.1 billion in 2014.That doesn't look like them making money! Is they why they ask for rates to roar upwards every year? To cover their losses and fund their expanding paychecks?

Still, Liberty Mutual officials said they expected some of 2015 losses to be one-time occurrences, such as the write-down of the Venezuelan operations, and the company remained well-positioned. Liberty Mutual’s income from premiums increased by just under 1 percent in 2015 to $34.5 billion.

At least one analyst agreed. In his investor note assessing the company’s bonds, Robert Hauff, a senior analyst with Wells Fargo Securities, said the results could have been worse considering the challenges.

“While some of this seems bad on the surface, we actually think some of the pain taken in 2015 was constructive, especially with regard to owning up to impairments in the energy portfolio and writing down the Venezuelan business, both of which were significant overhangs for investors,” Hauff wrote.

Liberty Mutual officials said the losses in Venezuela and in its energy investments have no effect on the pricing of its insurance policies.You believe them?

As a mutually owned insurer, Liberty Mutual is owned by its policyholders. Some mutually owned companies return some of their profits to policyholders in the form of dividend payments. But Liberty Mutual’s practice has been to use its profits to offer lower prices on policies, Cusolito said.Right.

--more--"The $hame is they have such wonderful television advertisements.Time to ca$h that check:

The leaders of the two largest mutual insurance companies in Massachusetts received hefty pay increases in 2015, the companies disclosed Monday.

Roger Crandall, chief executive of MassMutual Financial Group of Springfield, received a 21 percent raise in 2015, upping his salary to nearly $12 million, from $9.8 million the previous year.

David Long, chief executive of Liberty Mutual Insurance of Boston, earned a $15.7 million pay package in 2015, up nearly 13 percent from $13.9 million the year before. Long’s compensation reflects the “strong operating performance” of the auto and home insurance company, said John Cusolito, a spokesman for the company.

Cusolito pointed out that Liberty Mutual’s operating profits rose by 16 percent for 2014, which was used to determine his salary last year.

Long’s base salary was $1.1 million, but he received the remainder of his compensation in bonuses, other incentives, and perks such as security services and personal use of Liberty Mutual’s corporate aircraft.

Crandall, whose base pay was unchanged at $1 million, also earned most of his pay package from bonuses and additional incentives, the company disclosed on Monday. His perks included use of the company’s aircraft for board-approved personal travel.

MassMutual officials said Crandall’s pay package was based on his performance and the company’s success in meeting its long-term financial goals.

MassMutual on Monday also announced plans to nearly double its workforce of agents and financial advisers by acquiring MetLife Inc.’s US retail adviser group for $300 million.A week ago they announced job cuts!!

Liberty Mutual and MassMutual disclosed the pay packages to comply with state regulations that require insurers to report the compensation of their top executives each year.

As mutual insurers, Liberty Mutual and MassMutual are owned by policyholders, rather than shareholders.As if that meant anything.

Massachusetts Mutual Life Insurance Co. said Thursday that it is negotiating an acquisition that would nearly double its sales force of agents, a move that analysts said could help the Springfield company grow both its core life insurance business and the retirement and other financial products it offers.

MassMutual confirmed talks with MetLife Inc. to buy the New York-based insurer’s US retail adviser group, which includes a sales force of about 4,000 agents. MassMutual now has about 5,600 agents. Both companies said there is no timetable for concluding a deal.

“There can be no assurance that an agreement will be reached or that a transaction will be consummated,” MetLife said in a statement.

MassMutual is one of the nation’s biggest insurance firms, a Fortune 100 company with more than $250 billion in assets. MassMutual employs more than 7,000 people in the Springfield area, including in neighboring Connecticut.

Even though customers for auto and property insurance are increasingly moving online, agents still play an important role in selling life insurance, analysts said. Life insurance is complicated, and optional, unlike auto or property coverage, and it deals with a topic many people don’t want to think about.

Agents are necessary not only to explain the product, analysts say, but to convey the need for it and act as a trusted adviser.This bia$ed pre$$ is now making me double over. Do you trust the insurance companies government has mandated upon us? You sure they are looking out for you?

Acquiring experienced agents is a cost-effective way for MassMutual to grow since it can take years for agents to establish themselves in a market and get enough referrals to earn significant commission, analysts said. Only about 20 percent of new hires stick with the life insurance business for more than five years, according to industry estimates.

MetLife has been shrinking its business to avoid increased government oversight of the largest financial services companies — the so-called too-big-to-fail firms — that followed the 2008 financial crisis. Other life insurers have over the years shifted from in-house agents to independent advisers, who may also sell other companies products.

Proposals to further tighten financial industry regulations could lead to fewer companies offering financial advisory services and fewer people willing to become insurance agents and financial advisers, said Robert Kerzner, president of Limra, a research group for the financial services industry in Windsor, Conn.

Coming as the number of people entering retirement climbs, this trend could benefit companies such as MassMutual, with large sales forces to direct customers to financial products and planning services, Kerzner said. By 2040, there will be 82 million retirees in the United States.

“The largest number of people and the largest sums of dollars are migrating from preretirement to retirement in history,” Kerzner said.

If the deal with MetLife is completed, MassMutual stands to gain thousands of agents who could introduce their MetLife clients to MassMutual products and services, analysts said. But merging the different cultures of the companies could be a challenge for MassMutual, said Doug Bennett, a life insurance consultant in Jacksonville, Fla.

Life insurance is an emotional business because agents are selling a product that buyers are never going to use, which will only benefit their dependents upon their deaths. Rejection rates for agents are high.

“It’s not always dollars and cents,” he said. “There’s a lot of ego involved in this business.”

The talks between MassMutual and MetLife were first reported by the Wall Street Journal.

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